Tatas confident of turnaround in European steel arm

Indian conglomerate Tata Group is confident of a turnaround in the fortunes of its UK-based Tata Steel Europe, which has won contracts in the UK, France and Saudi Arabia, overcoming the challenging market conditions.

The group, with presence in various sectors such as auto, IT and chemicals, is also stepping up brand awareness activities in the UK, where it is the largest employer in the manufacturing sector, to strengthen its bonds with the locals.

"We have invested a lot in the modernisation and improvement of the (steel) plants, quite significantly in improving the range and quality of specialised steel products in our European plants. It is beginning to show results," Tata Ltd Executive Director David M Landsman told PTI.

He said it has been difficult for the steel sector in Europe as it has contracted quite considerably because of the financial crisis and also due to strong competition.

Yet, he sounded bullish that there would be a turnaround in the fortune of Tata Steel Europe.

"We are beginning to win contracts. We have won rail contracts in UK, France and Saudi Arabia. We have also won construction contracts," Landsman said.

He further added: "There are some infrastructure projects planned in the UK, we want to be competing in some of those like rail lines. There are some good prospects."

The other positive was the ability of energy intensive sectors in the UK to press the government to reduce the burden of 'green tax' that had posed "serious threat to the business in the UK because of the very high energy cost", he added.

"Tata Steel has been playing a leading role with other energy intensive industry like chemicals and glass to press the British government to take some of the pressure off these industries. We have had some significant success when the UK finance minister did make some significant changes to the energy regime (in the Budget)," Landsman said.

He said however that some serious challenges still remain as construction "is still considerably down over where it was pre-crisis".

Last year, weak macroeconomic and market environment particularly in Europe had forced Tata Steel to write off $1.6 billion.

Tata Steel group had reported a turnover of Rs 84,666 crore from its European operations in 2013-14 as against Rs 78,012 crore in the previous fiscal. Its EBIT was a loss of Rs 158 crore in FY14, an improvement on the Rs 2,425 crore loss in the previous year.

With the steel division is seeing positive signs, while its brands in other sectors such as JLR and Tetley continue to grow stronger, Tata is keen on strengthening the awareness of the group in the UK and Europe to reinforce its bonding and spread 'Tata values'.